China Construction America loses first battle in multibillion Baha Mar lawsuit

Casino developer Sarkis Izmirlian has won the right to pursue his $2.25bn lawsuit against the Chinese firm that built the Baha Mar casino-based resort in the Bahamas.

According to the Bahamas Tribune, the New York State Supreme Court has rejected a bid by China Construction America (CCA) to send Izmirlian’s suit to arbitration, which would have allowed CCA to keep the proceedings private.

CCA now has until 13 February 2019 to file a formal defence to allegations of fraud filed by Izmirlian’s BML Properties. The parties are scheduled to be back in court on 27 February.

In December 2017, Izmirlian’s BML Properties filed suit against CCA, the American subsidiary of China State Construction Engineering Corporation, presently the largest construction company in the world.

Izmirlian accused CCA of fraud and breach of contract for misleading him regarding its ability to complete the $4.2bn resort on schedule, which he said led him to take on more and more debt to keep the project alive.

BML Properties issued a statement saying that Justice Scarpulla, the judge hearing the case, "quoted from a 20 January 2015, letter secretly sent by the defendants, which stated that if CCA America did not correct its serious problems, the result would be ‘irreversible and catastrophic loss’ and ‘unmeasurable damages’."

Izmirlian lost his $845m investment in Baha Mar when China’s Export-Import bank foreclosed on the unfinished property in 2015. The 1,000-acre resort, which is located on the island of New Providence in the Bahamas, was later bought by Hong Kong-based conglomerate Chow Tai Fook Enterprises, and opened in April 2017. (See Further Reading for more on the background to the case.)

The amenities include three hotels (a Grand Hyatt, SLS Baha Mar, and the Rosewood) with a total of 2,200 rooms, 284 private residences, a casino of 9,300 sq m, a 2,800-sq-m spa, and a golf course designed by Jack Nicklaus.

Image: Baha Mar as it is today (Grand Hyatt)

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